UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-Q
(Mark
One)
|
þ
|
Quarterly
Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 for the quarterly period ended September 30, 2008;
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|
|
or
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||
|
o
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Transition
report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 for the transition period from ____________ to
____________.
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Commission
file Number: 1-32158
GEOGLOBAL
RESOURCES INC.
-----------------------------------------------------------------
(Exact
name of registrant as specified in its charter)
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DELAWARE
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33-0464753
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|
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(State
or other jurisdiction of incorporation of organization)
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(I.R.S.
employer identification no.)
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SUITE
#310, 605 – 1 STREET SW, CALGARY, ALBERTA, CANADA T2P
3S9
-----------------------------------------------------------------
(Address
of principal executive offices, zip code)
403/777-9250
------------------------------------------------
(Registrant's
Telephone Number, Including Area Code)
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
|
|
YES
[X]
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NO
[ ]
|
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of the
Exchange Act).
|
Large
accelerated filer
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Accelerated
filer
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þ
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Non-accelerated
filer
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
|
|
YES
[ ]
|
NO
[X]
|
Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date.
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Class
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Outstanding
at November 6, 2008
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|
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COMMON
STOCK, PAR VALUE $.001 PER SHARE
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72,805,756
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GEOGLOBAL
RESOURCES INC.
(a
development stage enterprise)
QUARTERLY
REPORT ON FORM 10-Q
TABLE
OF CONTENTS
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Page
No.
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||||
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PART
I
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FINANCIAL
INFORMATION
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|||
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Financial
Statements
|
||||
|
3
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||||
|
|
4
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|||
|
5
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||||
|
|
6
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|||
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7-21
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||||
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Management's
Discussion and Analysis of Financial Condition and Results of
Operations
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22
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|||
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Quantitative
and Qualitative Disclosures About Market Risk
|
32
|
|||
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Controls
and Procedures
|
33
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|||
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PART
II
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OTHER
INFORMATION
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|||
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Risk
Factors
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34
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|||
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Exhibits
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39
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PART
I. FINANCIAL INFORMATION
ITEM
1. FINANCIAL
STATEMENTS
|
GEOGLOBAL
RESOURCES INC.
(a
development stage enterprise)
(Unaudited)
|
||||||||
|
September
30, 2008
|
December
31, 2007
|
|||||||
|
Assets
|
||||||||
|
Current
|
||||||||
|
Cash
and cash equivalents
|
28,550,896 | 48,134,858 | ||||||
|
Accounts
receivable
|
159,005 | 171,977 | ||||||
|
Prepaids
and deposits
|
131,777 | 100,052 | ||||||
| 28,841,678 | 48,406,887 | |||||||
|
Restricted
deposits (note 11)
|
10,867,538 | 4,555,480 | ||||||
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Property
and equipment (note 4)
|
133,930 | 157,398 | ||||||
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Oil
and gas interests (note 5)
|
36,697,326 | 27,099,547 | ||||||
| 76,540,472 | 80,219,312 | |||||||
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Liabilities
|
||||||||
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Current
|
||||||||
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Accounts
payable
|
4,264,228 | 3,908,506 | ||||||
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Accrued
liabilities
|
2,735,793 | 2,355,322 | ||||||
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Due
to related companies (note 9)
|
8,637 | 66,152 | ||||||
| 7,008,658 | 6,329,980 | |||||||
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Asset
retirement obligation (note 6)
|
524,521 | 318,922 | ||||||
| 7,533,179 | 6,648,902 | |||||||
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Stockholders'
Equity
|
||||||||
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Capital
stock (note 7)
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||||||||
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Authorized
|
||||||||
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100,000,000
common shares with a par value of $0.001 each
|
||||||||
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1,000,000
preferred shares with a par value of $0.01 each
|
||||||||
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Issued
|
||||||||
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72,805,756
common shares (December 31, 2007 – 72,205,756)
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58,214 | 57,614 | ||||||
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Additional
paid-in capital
|
84,251,612 | 82,791,057 | ||||||
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Deficit
accumulated during the development stage
|
(15,302,533 | ) | (9,278,261 | ) | ||||
| 69,007,293 | 73,570,410 | |||||||
| 76,540,472 | 80,219,312 | |||||||
|
See
Going Concern (note 2), Guarantees (note 11), Commitments (note 12) and
Contingencies (note 13)
The
accompanying notes are an integral part of these Interim Consolidated
Financial Statements
|
||||||||
Page
3
|
GEOGLOBAL
RESOURCES INC.
(a
development stage enterprise)
(Unaudited)
|
||||||||||||||||||||
|
Three
months ended
Sept
30, 2008
|
Three
months ended
Sept
30, 2007
|
Nine
months
ended
Sept
30, 2008
|
Nine
months ended
Sept
30, 2007
|
Period
from
Inception,
Aug
21, 2002 to
Sept
30, 2008
|
||||||||||||||||
|
Restated
note
8c
|
Restated
note
8c
|
note
14a
|
||||||||||||||||||
|
Expenses
|
||||||||||||||||||||
|
General
and administrative
|
583,136 | 820,112 | 1,753,113 | 1,771,399 | 7,028,987 | |||||||||||||||
|
Consulting
fees
|
135,524 | (46,209 | ) | 599,785 | 22,469 | 5,760,499 | ||||||||||||||
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Professional
fees
|
187,075 | 147,424 | 705,771 | 488,918 | 2,496,418 | |||||||||||||||
|
Asset
impairment (note 5c)
|
-- | -- | 3,765,015 | -- | 3,765,015 | |||||||||||||||
|
Depreciation
|
12,932 | 14,941 | 38,496 | 39,285 | 305,231 | |||||||||||||||
|
Accretion
expense
|
8,490 | -- | 23,358 | -- | 23,358 | |||||||||||||||
| 927,157 | 936,268 | 6,885,538 | 2,322,071 | 19,379,508 | ||||||||||||||||
|
Other
expenses (income)
|
||||||||||||||||||||
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Consulting
fees recovered
|
-- | -- | -- | -- | (66,025 | ) | ||||||||||||||
|
Equipment
costs recovered
|
-- | -- | -- | -- | (19,395 | ) | ||||||||||||||
|
Gain
on sale of equipment
|
-- | -- | -- | -- | (42,228 | ) | ||||||||||||||
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Foreign
exchange (gain) loss
|
38,829 | 2,433 | 60,591 | (10,286 | ) | 65,628 | ||||||||||||||
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Interest
income
|
(230,006 | ) | (694,292 | ) | (921,857 | ) | (1,551,184 | ) | (5,334,955 | ) | ||||||||||
| (191,177 | ) | (691,859 | ) | (861,266 | ) | (1,561,470 | ) | (5,396,975 | ) | |||||||||||
|
Net
loss and comprehensive loss
for
the period
|
(735,980 | ) | (244,409 | ) | (6,024,272 | ) | (760,601 | ) | (13,982,533 | ) | ||||||||||
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Net
loss per share
– basic and diluted
(note 10)
|
(0.01 | ) | (0.02 | ) | (0.09 | ) | (0.03 | ) | ||||||||||||
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The
accompanying notes are an integral part of these Consolidated Financial
Statements
|
||||||||||||||||||||
Page
4
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GEOGLOBAL
RESOURCES INC.
(a
development stage enterprise)
(Unaudited)
|
||||||||||||||||||||
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Number
of
shares
|
Capital Stock
|
Additional
paid-in
capital
|
Accumulated
Deficit
|
Stockholders'
Equity
|
||||||||||||||||
|
Restated
note
8c
|
Restated
note
8c
|
Restated
note
8c
|
||||||||||||||||||
|
From
inception August 21, 2002 to December 31, 2006:
|
||||||||||||||||||||
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Common
shares issued on incorporation
|
1,000 | 64 | -- | -- | 64 | |||||||||||||||
|
Capital
stock of GeoGlobal at August 29, 2003
|
14,656,688 | 14,657 | -- | 10,914,545 | 10,929,202 | |||||||||||||||
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Elimination
due to reverse takeover
|
(1,000 | ) | (14,657 | ) | -- | (10,914,545 | ) | (10,929,202 | ) | |||||||||||
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Issued
on reverse takeover
|
34,000,000 | 34,000 | 1,072,960 | -- | 1,106,960 | |||||||||||||||
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Private
placement financings
|
10,252,400 | 10,252 | 33,630,348 | -- | 33,640,600 | |||||||||||||||
|
Options
exercised
|
3,719,168 | 3,721 | 4,217,105 | -- | 4,220,826 | |||||||||||||||
|
Purchase
Warrants exercised
|
3,000,000 | 3,000 | 7,497,000 | -- | 7,500,000 | |||||||||||||||
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Broker
Warrants exercised
|
580,000 | 580 | 869,420 | -- | 870,000 | |||||||||||||||
|
Stock-based
compensation
|
-- | -- | 7,779,938 | -- | 7,779,938 | |||||||||||||||
|
Share
issuance costs
|
-- | -- | (2,165,871 | ) | -- | (2,165,871 | ) | |||||||||||||
|
Net
loss and comprehensive loss
|
-- | -- | -- | (6,415,151 | ) | (6,415,151 | ) | |||||||||||||
|
Balance
as at December 31, 2006
|
66,208,256 | 51,617 | 52,900,900 | (6,415,151 | ) | 46,537,366 | ||||||||||||||
|
Common
shares issued during 2007:
|
||||||||||||||||||||
|
Options
exercised for cash
|
317,500 | 317 | 320,358 | -- | 320,675 | |||||||||||||||
|
June
2007 private placement financing (note 7a)
|
5,680,000 | 5,680 | 28,394,320 | -- | 28,400,000 | |||||||||||||||
|
Share
issuance costs on private placement
|
-- | -- | (2,612,973 | ) | -- | (2,612,973 | ) | |||||||||||||
|
2007
Compensation Options
|
-- | -- | 705,456 | -- | 705,456 | |||||||||||||||
|
2005
Stock Purchase Warrant modification
|
-- | -- | 1,320,000 | (1,320,000 | ) | -- | ||||||||||||||
|
2005
Compensation Option & Warrant
modification
|
-- | -- | 240,000 | -- | 240,000 | |||||||||||||||
|
Stock-based
compensation
|
-- | -- | 1,522,996 | -- | 1,522,996 | |||||||||||||||
|
Net
loss and comprehensive loss for 2007
|
-- | -- | -- | (1,543,110 | ) | (1,543,110 | ) | |||||||||||||
|
Balance
as at December 31, 2007
|
72,205,756 | 57,614 | 82,791,057 | (9,278,261 | ) | 73,570,410 | ||||||||||||||
|
Common
shares issued during 2008:
|
||||||||||||||||||||
|
Options
exercised for cash
|
600,000 | 600 | 661,400 | -- | 662,000 | |||||||||||||||
|
Stock-based
compensation (note 8b)
|
-- | -- | 799,155 | -- | 799,155 | |||||||||||||||
|
Net
loss and comprehensive loss for the period
|
-- | -- | -- | (6,024,272 | ) | (6,024,272 | ) | |||||||||||||
|
Balance
as at September 30, 2008
|
72,805,756 | 58,214 | 84,251,612 | (15,302,533 | ) | 69,007,293 | ||||||||||||||
|
See
note 7 for further information
The
accompanying notes are an integral part of these Interim Consolidated
Financial Statements
|
||||||||||||||||||||
Page
5
|
GEOGLOBAL
RESOURCES INC.
(a
development stage enterprise)
(Unaudited)
|
||||||||||||||||||||
|
Three
months
ended
Sept
30, 2008
|
Three
months
ended
Sept
30, 2007
|
Nine
months
ended
Sept
30, 2008
|
Nine
months
ended
Sept
30, 2007
|
Period
from
Inception,
Aug
21, 2002 to
Sept
30, 2008
|
||||||||||||||||
|
Restated
|
Restated
|
note
14a
|
||||||||||||||||||
|
Cash
flows provided by (used in)
operating
activities
|
note
8c
|
note
8c
|
||||||||||||||||||
|
Net
loss
|
(735,980 | ) | (244,409 | ) | (6,024,272 | ) | (760,601 | ) | (13,982,533 | ) | ||||||||||
|
Adjustment
to reconcile net loss to
net
cash used in operating activities:
|
||||||||||||||||||||
|
Accretion
expense
|
8,490 | -- | 23,358 | -- | 23,358 | |||||||||||||||
|
Asset
impairment
|
-- | -- | 3,765,015 | -- | 3,765,015 | |||||||||||||||
|
Depreciation
|
12,932 | 14,941 | 38,496 | 39,285 | 305,229 | |||||||||||||||
|
Gain
on sale of equipment
|
-- | -- | -- | -- | (42,228 | ) | ||||||||||||||
|
Stock-based
compensation
|
113,202 | 35,277 | 425,864 | 374,050 | 5,711,511 | |||||||||||||||
|
2005
Compensation Option and
Warrant
modification
|
-- | 240,000 | -- | 240,000 | 240,000 | |||||||||||||||
|
Changes
in operating assets and liabilities:
|
||||||||||||||||||||
|
Accounts
receivable
|
128,476 | (232,529 | ) | 12,972 | (228,514 | ) | (84,005 | ) | ||||||||||||
|
Prepaids
and deposits
|
(64,877 | ) | (42,350 | ) | (29,221 | ) | (122,982 | ) | (94,878 | ) | ||||||||||
|
Accounts
payable
|
103,535 | 13,382 | (78,219 | ) | 102,956 | 249,439 | ||||||||||||||
|
Accrued
liabilities
|
(62,200 | ) | 30,000 | (384,700 | ) | (3,487 | ) | 55,300 | ||||||||||||
|
Due
to related companies
|
(58,735 | ) | 24,678 | (57,515 | ) | 19,140 | (33,119 | ) | ||||||||||||
| (555,157 | ) | (161,010 | ) | (2,308,222 | ) | (340,153 | ) | (3,886,911 | ) | |||||||||||
|
Cash
flows provided by (used in)
investing
activities
|
||||||||||||||||||||
|
Oil
and gas interests
|
(4,184,651 | ) | (5,479,467 | ) | (11,637,262 | ) | (7,860,425 | ) | (34,400,598 | ) | ||||||||||
|
Property
and equipment
|
-- | (317,255 | ) | (15,028 | ) | (791,792 | ) | (479,733 | ) | |||||||||||
|
Proceeds
on sale of equipment
|
-- | -- | -- | -- | 82,800 | |||||||||||||||
|
Cash
acquired on acquisition
|
-- | -- | -- | -- | 3,034,666 | |||||||||||||||
|
Restricted
deposits
|
(2,218,320 | ) | (1,347,532 | ) | (7,482,058 | ) | (954,379 | ) | (12,037,538 | ) | ||||||||||
|
Changes
in investing assets and liabilities:
|
||||||||||||||||||||
|
Cash
call receivable
|
-- | 62,547 | -- | -- | -- | |||||||||||||||
|
Prepaids
and deposits
|
38,828 | -- | (2,504 | ) | -- | (36,899 | ) | |||||||||||||
|
Accounts
payable
|
3,170,803 | 485,641 | 433,941 | (916,597 | ) | 3,965,781 | ||||||||||||||
|
Accrued
liabilities
|
(102,968 | ) | 833,360 | 765,171 | 1,046,319 | 2,680,493 | ||||||||||||||
| (3,296,308 | ) | (5,762,706 | ) | (17,937,740 | ) | (9,476,874 | ) | (37,191,028 | ) | |||||||||||
|
Cash
flows provided by (used in)
financing
activities
|
||||||||||||||||||||
|
Proceeds
from issuance of common shares
|
662,000 | -- | 662,000 | 28,720,675 | 75,614,165 | |||||||||||||||
|
Share
issuance costs
|
-- | (112,226 | ) | -- | (2,015,272 | ) | (4,073,388 | ) | ||||||||||||
|
Changes
in financing liabilities:
|
||||||||||||||||||||
|
Note
payable
|
-- | -- | -- | -- | (2,000,000 | ) | ||||||||||||||
|
Accounts
payable
|
-- | (63,840 | ) | -- | 4,450 | 61,078 | ||||||||||||||
|
Due
to related companies
|
-- | -- | -- | -- | 26,980 | |||||||||||||||
| 662,000 | (176,066 | ) | 662,000 | 26,709,853 | 69,628,835 | |||||||||||||||
|
Net
increase (decrease) in cash and
cash
equivalents
|
(3,189,465 | ) | (6,099,782 | ) | (19,583,962 | ) | 16,892,826 | 28,550,896 | ||||||||||||
|
Cash
and cash equivalents, beginning of period
|
31,740,361 | 55,355,586 | 48,134,858 | 32,362,978 | -- | |||||||||||||||
|
Cash
and cash equivalents, end of period
|
28,550,896 | 49,255,804 | 28,550,896 | 49,255,804 | 28,550,896 | |||||||||||||||
|
Cash
and cash equivalents
|
||||||||||||||||||||
|
Current
bank accounts
|
511,428 | 1,065,149 | 511,428 | |||||||||||||||||
|
Short
term deposits
|
28,039,468 | 48,190,655 | 28,039,468 | |||||||||||||||||
| 28,550,896 | 49,255,804 | 28,550,896 | ||||||||||||||||||
|
Cash
taxes paid during the period
|
32,650 | 18,775 | 98,163 | |||||||||||||||||
|
The
accompanying notes are an integral part of these Consolidated Financial
Statements
|
||||||||||||||||||||
Page
6
GeoGlobal
Resources Inc.
(a
development stage enterprise)
Notes
to the Consolidated Financial Statements
(Unaudited)
September
30, 2008
The
Company is engaged primarily in the pursuit of petroleum and natural gas through
exploration and development in India. Since inception, the efforts of
GeoGlobal have been devoted to the pursuit of Production Sharing Contracts
(PSCs) with the Gujarat State Petroleum Corporation (GSPC), Oil India Limited
(OIL) among others, and the Government of India (GOI) and the development
thereof. The Company is a Delaware corporation whose common stock is
listed and traded on the American Stock Exchange under the symbol
GGR.
2. Going
Concern
To date,
the Company has not earned revenue from its operations and is considered to be
in the development stage. The Company incurs negative cash flows from
operations, and at this time all exploration activities and overhead expenses
are financed by way of equity issuance and interest income. The
recoverability of the costs incurred to date is uncertain and dependent upon
achieving commercial production or sale. The Company’s prospects must
be considered in light of the risks, expenses and difficulties frequently
encountered by companies in their early stage of operations, particularly
companies in the oil and gas exploration industry.
The
Company's ability to continue as a going concern is dependent upon obtaining the
necessary financing to complete further exploration and development activities
and generate profitable operations from its oil and natural gas interests in the
future. The Company's financial statements as at and for the three
months and nine months ended September 30, 2008 have been prepared on a going
concern basis, which contemplates the realization of assets and the settlement
of liabilities and commitments in the normal course of business. The
Company incurred a net loss of $0.7 million, and used $0.6 million of cash flow
in its operating activities for the three months ended September 30,
2008. The Company incurred a net loss of $6.0 million, used $2.3
million of cash flow in its operating activities for the nine months ended
September 30, 2008, and had an accumulated deficit of $15.3 million as at
September 30, 2008. These matters raise doubt about the Company’s
ability to continue as a going concern.
The
Company expects to incur substantial expenditures to further its exploration
programs and the Company's existing cash balance and any cash flow from
operating activities may not be sufficient to satisfy its current obligations
and meet its exploration commitments. The Company is considering
various alternatives to remedy any future shortfall in capital. The
Company may deem it necessary to raise capital through equity markets, debt
markets or other innovative financing arrangements, including participation
arrangements that may be available for continued exploration
expenditures. There can be no assurance this capital will be
available and if it is not, we may be forced to substantially curtail or cease
exploration block acquisition and/or exploration expenditures.
The
Company is working with its joint venture partners to bring commercial
production on stream in an effort to generate operating cash
flows. Any operating cash flows will be dependent upon many factors,
including production levels, sales volumes, market prices and other factors
beyond our control.
To
provide financing for the Company's ongoing operations, the Company secured
$28.4 million in financing in June 2007. As at September 30, 2008,
the Company has working capital of $21.8 million which is available for the
Company's future operations. In addition, the Company has $10.8
million in restricted deposits pledged as security against the minimum work
program (MWP) which will be released upon completion of the MWP.
Should
the going concern assumption not be appropriate and the Company is not able to
realize its assets and settle its liabilities, commitments and contingencies (as
described in note 13) in the normal course of operations, these consolidated
financial statements would require adjustments to the amounts and
classifications of assets and liabilities, and these adjustments could be
significant.
These
consolidated financial statements do not reflect the adjustments or
reclassifications of assets and liabilities that would be necessary if the
Company is unable to continue as a going concern.
Page
7
GeoGlobal
Resources Inc.
(a
development stage enterprise)
Notes
to the Consolidated Financial Statements
(Unaudited)
September
30, 2008
3. Significant
Accounting Policies
a) Basis
of presentation
The
accompanying interim condensed consolidated financial statements of the Company,
with the exception of the Consolidated Balance Sheet at December 31, 2007, have
not been audited, are presented in United States (US) dollars unless otherwise
noted and have been prepared by management in accordance with accounting
principles generally accepted in the United States of America (US
GAAP).
In the
opinion of management, the interim condensed consolidated financial statements
reflect all of the normal and recurring adjustments necessary to present fairly
the financial position at September 30, 2008, the results of operations and cash
flows for the nine months ended September 30, 2008 and 2007 and for the period
from inception of August 21, 2002 to September 30, 2008. In preparing the
accompanying financial statements, management has made certain estimates and
assumptions that affect reported amounts in the financial statements and related
disclosures. The Company bases its estimates on various assumptions that
are believed to be reasonable under the circumstances. Accordingly, actual
results may differ significantly from these estimates under different
assumptions or circumstances.
Certain
information, accounting policies, and footnote disclosures normally included in
financial statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted in this
Form 10-Q pursuant to certain rules and regulations of the Securities and
Exchange Commission. These condensed consolidated financial statements should be
read in conjunction with the audited consolidated financial statements and notes
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2007. The results of operations for interim periods are not
necessarily indicative of the results to be expected for the full
year.
b) Recently
adopted Accounting Pronouncements
In
September 2006, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 157, "Fair Value Measurements"
(SFAS 157). SFAS 157 defines fair value, establishes a framework for measuring
fair value in generally accepted accounting principles, and expands disclosures
about fair value measurements. SFAS No. 157 is effective for
financial statements issued for periods beginning after November 15,
2007. On February 12, 2008, the FASB issued Staff Position No. FAS
157-2 (FSP 157-2) which proposed a one year deferral for the implementation of
SFAS 157 for non-financial assets and liabilities that are recognized or
disclosed at fair value on a nonrecurring basis (less frequent than
annually).
Effective
January 1, 2008, the Company adopted SFAS 157 except for measurements of those
non-financial assets and liabilities subject to the one-year
deferral. Given the nature of the Company's financial instruments,
the adoption of SFAS 157 did not have an impact on its financial position,
results of operations or cash flows. Beginning January 1, 2009, the
Company will adopt the provisions for nonfinancial assets and nonfinancial
liabilities that are not required or permitted to be measured at fair value on a
recurring basis. The Company is in the process of evaluating this
standard with respect to its effect on nonfinancial assets and liabilities and
has not yet determined the impact that it will have on its financial statements
upon full adoption in 2009.
SFAS 157,
defines fair value, establishes a framework for measuring fair value, outlines a
fair value hierarchy based on inputs used to measure fair value and enhances
disclosure requirements for fair value measurements. Fair value is
defined as the price at which an asset could be exchanged in a current
transaction between knowledgeable, willing parties. Where available,
fair value is based on observable market prices or parameters or derived from
such prices or parameters. Where observable prices or inputs are not
available, use of unobservable prices or inputs are used to estimate the current
fair value, often using an internal valuation model. These valuation
techniques involve some level of management estimation and judgment, the degree
of which is dependent on the item being valued.
Page
8
GeoGlobal
Resources Inc.
(a
development stage enterprise)
Notes
to the Consolidated Financial Statements
(Unaudited)
September
30, 2008
3. Significant
Accounting Policies (continued)
SFAS 157
does not prescribe which valuation technique should be used when measuring fair
value and does not prioritize among the techniques. SFAS 157 establishes a
fair value hierarchy that prioritized the inputs used in applying the various
valuation techniques. Inputs broadly refer to the assumptions that market
participants use to make pricing decisions, including assumptions about
risk. Level 1 inputs are given the highest priority in the fair value
hierarchy while Level 3 inputs are given the lowest priority. The adoption
of this policy did not have a material effect on the consolidated financial
statements. The Company's financial instruments subject to Level 1 inputs
are cash and cash equivalents and restricted deposits. The Company does
not currently have any Level 2 or 3 inputs. The three levels of the
fair value hierarchy are as follows:
|
·
|
Level
1 – Observable inputs that reflect unadjusted quoted prices for identical
assets or liabilities in active markets as of the reporting date.
Active markets are those in which transactions for the asset or liability
occur in sufficient frequency and volume to provide pricing information on
an ongoing basis.
|
|
·
|
Level
2 – Observable market-based inputs or unobservable inputs that are
corroborated by market data. These are inputs other than quoted
prices in active markets included in Level 1, which are either directly or
indirectly observable as of the reporting
date.
|
|
·
|
Level
3 – Unobservable inputs that are not corroborated by market data and may
be used with internally developed methodologies that result in
management's best estimate of fair
value.
|
Effective
January 1, 2008, the Company adopted SFAS 159, "The Fair Value Option for
Financial Assets and Financial Liabilities". This standard allows an
entity the irrevocable option to elect fair value for the initial and subsequent
measurement for certain financial assets and liabilities on a
contract-by-contract basis. The Company did not elect fair value as
an alternative, as provided under SFAS 159 for any of its financial assets and
liabilities that are not currently measured at fair value.
4. Property
and Equipment
|
September
30, 2008
|
December
31, 2007
|
|||||||
|
Computer
and office equipment
|
396,933 | 381,905 | ||||||
|
Accumulated
depreciation
|
(263,003 | ) | (224,507 | ) | ||||
| 133,930 | 157,398 | |||||||
5. Oil
and Gas Interests
|
Exploration
costs incurred in:
|
||||
|
2002
|
21,925 | |||
|
2003
|
178,829 | |||
|
2004
|
506,269 | |||
|
2005
|
3,250,700 | |||
|
2006
|
8,163,611 | |||
|
Period
from Inception, Aug 21, 2002 to Dec 31, 2006
|
12,121,334 | |||
|
2007
|
14,978,213 | |||
|
Balance
– December 31, 2007
|
27,099,547 | |||
|
Additions
during the period
|
9,597,779 | |||
|
Balance
– September 30, 2008
|
36,697,326 | |||
a) Exploration
costs
The
exploration costs incurred to date are not subject to
depletion. These exploration costs cover ten exploration blocks known
as; the KG Offshore and Onshore Blocks, the Mehsana Block, the Sanand/Miroli
Block, the Ankleshwar Block, the DS 03 and DS 04 Blocks, the Tarapur Block and
RJ Block 20 and RJ Block 21.
Page
9
GeoGlobal
Resources Inc.
(a
development stage enterprise)
Notes
to the Consolidated Financial Statements
(Unaudited)
September
30, 2008
5. Oil
and Gas Interests (continued)
b) Carried
Interest Agreement (CIA)
|
|
On
August 27, 2002, GeoGlobal entered into a CIA with GSPC, which grants the
Company a 10% Carried Interest (CI) (net 5%) in the KG Offshore Block. The
CIA provides that GSPC is responsible for GeoGlobal's entire share of any
and all costs incurred during the Exploration Phase prior to the date of
initial commercial production.
|
|
|
Under
the terms of the CIA, all of GeoGlobal's and Roy Group (Mauritius) Inc.'s
(RGM), a related party (see note 9a), proportionate share of capital costs
for exploration and development activities will be recovered by GSPC
without interest over the projected production life or ten years,
whichever is less, from oil and natural gas produced on the Exploration
Block. GeoGlobal is not entitled to any share of production until GSPC has
recovered the Company's share of the costs and expenses that were paid by
GSPC on behalf of the Company and
RGM.
|
As at
September 30, 2008, GSPC has incurred costs of approximately $80.0 million
attributable to GeoGlobal under the CIA of which 50% is for the account of
RGM.
GeoGlobal
has been advised by GSPC, that GSPC is seeking payment of the amount by which
the exploration costs attributable to GeoGlobal under the PSC relating to the KG
Offshore Block exceeds the amount that GSPC deems it is obligated to pay on
behalf of GeoGlobal (including the net 5% participating interest (PI) of RGM)
under the terms of the CIA plus interest. GSPC asserts that the
Company is required to pay 10% of the exploration expenses over and above gross
costs of $59.23 million (10% being $5.92 million) plus
interest. GeoGlobal disputes this assertion of GSPC. See
note 13.
c) Impairment
of Oil and Gas Interest in Egypt and the Middle East
The
Company entered into a Joint Bidding Agreement with two additional parties to
bid on certain exploration blocks in the Arab Republic of Egypt. The
agreement provided that the Company was to receive a 30% PI in any PSCs entered
into. These blocks include offshore exploration Block 6 (also
referred to as N. Hap'y) and onshore exploration Block 8 (also referred to as
South Diyur) in the Arab Republic of Egypt. These blocks were awarded
subject to certain terms and conditions.
Effective
December 31, 2007, the Company entered into two agreements with one of its
co-parties. The assignment agreement sets out the terms whereby the
Company assigned to the co-party all the Company's rights to receive a 30% PI in
the two exploration blocks awarded by the Arab Republic of Egypt in exchange for
an option (the Option Agreement) exercisable on or before April 30, 2008
(subsequently extended to June 15, 2008) to reacquire all or a portion of those
rights.
The
Company determined the value of the Egyptian blocks to be impaired at June 30,
2008 and therefore charged to the statement of operations, was the full carrying
value of the Egyptian properties. The amount of the impairment
includes the value of the capitalized costs and the value of the related
non-refundable bank guarantees.
In
addition to the Egyptian impairment, the Company also determined that the
carrying values of the Oman and Yemen blocks were impaired as the Company has no
current plans to further explore these areas. These amounts were
charged to the statement of operations during the second quarter.
Page
10
GeoGlobal
Resources Inc.
(a
development stage enterprise)
Notes
to the Consolidated Financial Statements
(Unaudited)
September
30, 2008
6. Asset
Retirement Obligation
Asset
retirement obligations are recorded for an obligation where the Company will be
required to retire, dismantle, abandon and restore tangible long-lived
assets. These obligations pertain to certain exploration blocks where
the Company has currently drilled wells.
The
following table summarizes the changes in the asset retirement
obligation:
|
September
30, 2008
|
December
31, 2007
|
|||||||
|
Asset
retirement obligation at beginning of period
|
318,922 | -- | ||||||
|
Obligations
incurred
|
182,241 | 318,922 | ||||||
|
Accretion
|
23,358 | -- | ||||||
|
Asset
retirement obligation at end of period
|
524,521 | 318,922 | ||||||
In
determining the fair value of the asset retirement obligations, the estimated
cash flows of new obligations incurred during the period have been discounted at
8.0% (December 31, 2007 – 8.0%). The total undiscounted amount of the
estimated cash flows required to settle the obligations is $1,081,000 (December
31, 2007 - $689,000). The obligations will be settled on an ongoing basis over
the useful lives of the operating assets, which extend up to 10 years in the
future.
7. Capital
Stock
a) June
2007 Financing
During
June 2007, GeoGlobal completed the sale of 5,680,000 Units of its securities at
$5.00 per Unit for aggregate gross cash proceeds of $28,400,000.
Each Unit
is comprised of one common share and one half of one warrant. One
full warrant (2007 Stock Purchase Warrant) entitles the holder to purchase one
additional common share for $7.50, for a term of two years expiring June 20,
2009. In addition, compensation options (2007 Compensation Options)
were issued to the placement agents entitling them to purchase an aggregate of
340,800 common shares at an exercise price of $5.00 per share until June 20,
2009. The 2007 Stock Purchase Warrants and the 2007 Compensation
Options are subject to accelerated expiration in the event that the price of the
Company's common shares on the American Stock Exchange is $12.00 or more for 20
consecutive trading days, the resale of the shares included in the Units and the
shares issuable on exercise of the 2007 Stock Purchase Warrants and the 2007
Compensation Options have been registered under the US Securities Act of 1933,
as amended (the Act), and the hold period for Canadian subscribers has
expired. In such events, the term will be reduced to 30 days from the
date of issuance of a news release announcing such accelerated expiration of the
term. At September 30, 2008 since not all such events have occurred,
the accelerated expiration of the term for the 2007 Stock Purchase Warrants and
the 2007 Compensation Options has not been triggered.
b) Warrants
and Compensation Options
i) 2007
Compensation Options
As at
September 30, 2008, none of the 340,800 2007 Compensation Options were
exercised. If fully exercised, the 2007 Compensation Options would
result in the issuance of 340,800 common shares for gross proceeds of
$1,704,000
ii) 2007
Stock Purchase Warrants
As at
September 30, 2008, none of the 2,840,000 2007 Stock Purchase Warrants were
exercised. If fully exercised, the 2007 Stock Purchase Warrants would
result in the issuance of 2,840,000 common shares for gross proceeds of
$21,300,000.
Page
11
GeoGlobal
Resources Inc.
(a
development stage enterprise)
Notes
to the Consolidated Financial Statements
(Unaudited)
September
30, 2008
7. Capital
Stock (continued)
|
|
iii)
|
2005
Compensation Options
|
As at
September 30, 2008, none of the 195,144 2005 Compensation Options were
exercised. If fully exercised, the 2005 Compensation Options would
result in the issuance of 195,144 Units at an exercise price of $6.50 resulting
in gross proceeds of $1,268,436.
On
September 6, 2007, the Company extended the expiration date of all outstanding
2005 Compensation Options and associated 2005 Compensation Option Warrants which
were to expire on September 9, 2007, to June 20, 2009.
iv) 2005
Compensation Option Warrants
As at
September 30, 2008, none of the 97,572 2005 Compensation Option Warrants have
been issued as a result of the 2005 Compensation Options not being
exercised. If the 2005 Compensation Options are exercised and the
2005 Compensation Option Warrants issued, such Warrants if exercised, would
result in the issuance of 97,572 common shares for gross proceeds of
$878,148.
v) 2005
Stock Purchase Warrants
As at
September 30, 2008, none of the 2005 Stock Purchase Warrants have been
exercised. If all of the 2005 Stock Purchase Warrants were exercised,
it would result in the issuance of 2,126,200 common shares for gross proceeds of
$19,135,800.
On
September 6, 2007, the Company extended the expiration date of all outstanding
2005 Stock Purchase Warrants which were to expire on September 9, 2007, to June
20, 2009.
c) Escrow
shares
On August
29, 2003, the Company completed a transaction with Mr. Roy and GeoGlobal
Resources (India) Inc. (GeoGlobal India), a corporation then wholly-owned by Mr.
Roy, whereby the Company acquired from Mr. Roy all of the outstanding capital
stock of GeoGlobal India. In exchange for the outstanding capital
stock of GeoGlobal India, the Company issued 34.0 million shares of its Common
Stock. Of the 34.0 million shares, 14.5 million shares were delivered
to Mr. Roy at the closing of the transaction and 14.5 million shares were
released to Mr. Roy from escrow upon the commencement of a drilling program on
the KG Offshore Block. The final 5.0 million shares remaining in
escrow will be released only if a commercial discovery as defined under the PSC
is declared on the KG Offshore Block.
8. Stock
Options
a) i) The
Company's 1998 Stock Incentive Plan (1998 Plan)
Under the
terms of the 1998 Plan, as amended, 12,000,000 common shares have been reserved
for issuance on exercise of options granted under the 1998 Plan. As
at September 30, 2008, the Company had 2,290,697 (December 31, 2007 – 2,380,697)
common shares remaining for the grant of options under the 1998
Plan. The Board of Directors of the Company may amend or modify the
1998 Plan at any time, subject to any required stockholder
approval. The 1998 Plan will terminate on the earliest of: (i) 10
years after the 1998 Plan Effective Date, being December 4, 2008; (ii) the date
on which all shares available for issuance under the 1998 Plan have been issued
as fully-vested shares; or, (iii) the termination of all outstanding options in
connection with certain changes in control or ownership of the
Company. These options can be granted until expiry of the 1998 Plan
on December 4, 2008.
Page
12
GeoGlobal
Resources Inc.
(a
development stage enterprise)
Notes
to the Consolidated Financial Statements
(Unaudited)
September
30, 2008
8. Stock
Options (continued)
ii) The
Company's 2008 Stock Incentive Plan (2008 Plan)
On July
29, 2008 at the Annual Meeting of Stockholders, the shareholders of the Company
approved the adoption of the 2008 Plan. Under the terms of the 2008
Plan, 12,000,000 common shares have been reserved for issuance on exercise of
options granted under the 2008 Plan. As at September 30, 2008, the
company had 12,000,000 common shares remaining for the grant of options under
the 2008 Plan. The Board of Directors of the Company may amend or
modify the 2008 Plan at any time, subject to any required stockholder
approval. The 2008 Plan will terminate on the earliest of: (i) 10
years after the 2008 Plan Effective Date, being May 30, 2018; (ii) the date on
which all shares available for issuance under the 2008 Plan have been issued as
fully-vested shares; or, (iii) the termination of all outstanding options in
connection with certain changes in control or ownership of the
Company. The Company intends to file a Registration Statement Form
S-8 prior to any of these options being issued.
b) Stock-based
compensation
The
Company adopted FAS 123(R), using the modified-prospective-transition method on
January 1, 2006. Under this method, the Company is required to
recognize compensation cost for stock-based compensation arrangements with
employees and directors based on their grant date fair value using the
Black-Scholes option-pricing model, such cost to be expensed over the
compensations' respective vesting periods. For awards with graded
vesting, in which portions of the award vest in different periods, the Company
recognizes compensation costs over the vesting periods for each separate
tranche.
The
following table summarizes stock-based compensation for employees and
non-employee consultants:
|
Three
months
ended
Sept
30, 2008
|
Three
months
ended
Sept
30, 2007
|
Nine
months
ended
Sept
30, 2008
|
Nine
months
ended
Sept
30, 2007
|
Period
from
Inception,
Aug
21, 2002 to
Sept
30, 2008
|
||||||||||||||||
|
Restated
note
8c
|
Restated
note
8c
|
|||||||||||||||||||
|
Stock
based compensation
|
||||||||||||||||||||
|
Consolidated
Statements of Operations
|
||||||||||||||||||||
|
General
and administrative
|
118,297 | 244,078 | 484,785 | 747,127 | 2,463,088 | |||||||||||||||
|
Consulting
fees
|
(5,095 | ) | (208,801 | ) | (58,921 | ) | (373,077 | ) | 3,248,423 | |||||||||||
| 113,202 | 35,277 | 425,864 | 374,050 | 5,711,511 | ||||||||||||||||
|
Consolidated
Balance Sheets
|
||||||||||||||||||||
|
Oil
and gas interests
|
69,580 | 213,484 | 373,291 | 477,764 | 4,390,580 | |||||||||||||||
| 182,782 | 248,761 | 799,155 | 851,814 | 10,102,091 | ||||||||||||||||
Page
13
GeoGlobal
Resources Inc.
(a
development stage enterprise)
Notes
to the Consolidated Financial Statements
(Unaudited)
September
30, 2008
8. Stock
Options (continued)
c) Restatement
The
periods ended September 30, 2007 and the period from inception August 21, 2002
to September 30, 2007 have been restated due to an error in the classification
and calculation for stock-based compensation for non-employee
consultants.
The
following is a summary of the effects of this restatement on the Consolidated
Statements of Operations for the three and nine months ended September 30, 2007
and for the period from inception of August 21, 2002 to September 30,
2007.
|
As
Reported
|
Adjustment
|
As
Restated
|
||||||||||||||||||||||
|
Three
months
ended
Sept
30, 2007
|
Period
of Inception,
Aug
21, 2002
to
Sept 30, 2007
|
Three
months
ended
Sept
30, 2007
|
Period
of Inception,
Aug
21, 2002
to
Sept 30, 2007
|
Three
months
ended
Sept
30, 2007
|
Period
of Inception,
Aug
21, 2002
to
Sept 30, 2007
|
|||||||||||||||||||
|
Statements
of Operations
|
||||||||||||||||||||||||
|
General
& administrative
|
791,587 | 4,082,438 | 28,525 | 684,603 | 820,112 | 4,767,041 | ||||||||||||||||||
|
Consulting
fees
|
337,038 | 2,772,555 | (383,247 | ) | 2,053,716 | (46,209 | ) | 4,826,271 | ||||||||||||||||
|
Net
loss and
comprehensive
loss
|
(599,131 | ) | (4,437,433 | ) | 354,722 | (2,738,319 | ) | (244,409 | ) | (7,175,752 | ) | |||||||||||||
|
Net
loss per share
-
basic and diluted
|
(0.03 | ) | 0.01 | (0.02 | ) | |||||||||||||||||||
|
Nine
months
ended
Sept
30, 2007
|
Nine
months
ended
Sept
30, 2007
|
Nine
months
ended
Sept
30, 2007
|
||||||||||||||||||||||
|
Statements
of Operations
|
||||||||||||||||||||||||
|
General
& administrative
|
1,571,722 | 199,677 | 1,771,399 | |||||||||||||||||||||
|
Consulting
fees
|
908,304 | (885,835 | ) | 22,469 | ||||||||||||||||||||
|
Net
loss and
comprehensive
loss
|
(1,446,759 | ) | 686,158 | (760,601 | ) | |||||||||||||||||||
|
Net
loss per share
-
basic and diluted
|
(0.04 | ) | 0.01 | (0.03 | ) | |||||||||||||||||||
For a
full summary of the restatement, these financial statements should be read in
conjunction with the audited consolidated financial statements and related notes
in our Annual Report on Form 10-K for the year ended December 31,
2007.
d) Black-Scholes
Assumptions
During
the nine months ended September 30, 2008 and 2007, options of 200,000 and
830,000, respectively, were granted to the Company's directors and employees
under the terms of the 1998 Plan. The fair value of each option
granted was estimated on the date of grant using the Black-Scholes
option-pricing model. Weighted average assumptions used in the
valuation are disclosed in the following table:
|
Three
months
ended
Sept
30, 2008
|
Three
months
ended
Sept
30, 2007
|
Nine
months
ended
Sept
30, 2008
|
Nine
months
ended
Sept
30, 2007
|
|||||||||||||
|
Restated
note
8c
|
Restated
note
8c
|
|||||||||||||||
|
Fair
value of stock options granted (per option)
|
$ | 3.08 | $ | 1.72 | $ | 3.08 | $ | 1.80 | ||||||||
|
Risk-free
interest rate
|
4.1% | 4.9% | 4.1% | 4.9% | ||||||||||||
|
Volatility
|
93% | 65% | 93% | 66% | ||||||||||||
|
Expected
life
|
10
years
|
1.5
years
|
10
years
|
1.6
years
|
||||||||||||
|
Dividend
yield
|
0% | 0% | 0% | 0% | ||||||||||||
Page
14
GeoGlobal
Resources Inc.
(a
development stage enterprise)
Notes
to the Consolidated Financial Statements
(Unaudited)
September
30, 2008
8. Stock
Options (continued)
During
the periods ended September 30, 2008 and 2007, options of nil and 625,000,
respectively, were granted to non-employee consultants in exchange for services
under the terms of the 1998 Plan. The Company believes that the
estimated fair value of the stock options is more readily measurable than the
fair value of services rendered. The fair value of each option granted to
non-employee consultants is calculated at each reporting date using the
Black-Scholes option-pricing model. Weighted average assumptions used
in the valuation are disclosed in the following table:
|
Three
and Nine
months
ended
Sept
30, 2008
|
Three
and Nine
months
ended
Sept
30, 2007
|
|||||||
|
Restated
note
8c
|
||||||||
|
Fair
value of stock options granted (per option)
|
$ | 0.72 | $ | 0.75 | ||||
|
Risk-free
interest rate
|
2.6% | 4.5% | ||||||
|
Volatility
|
84% | 63% | ||||||
|
Expected
life
|
2.3
years
|
1.0
years
|
||||||
|
Dividend
yield
|
0% | 0% | ||||||
e) Stock
option table
|
|
The
following table summarizes option activity during the nine months ended
September 30, 2008:
|
|
Options
|
Shares
(#)
|
Weighted
Average Exercise Price per Share
|
Weighted
Average Remaining Contractual Term
|
Aggregate
Intrinsic Value
|
||||||||||||
|
Outstanding
at December 31, 2007
|
4,470,000 | 4.04 |
4.38
years
|
4,554,000 | ||||||||||||
|
Granted
|
200,000 | 3.48 |
9.83
years
|
-- | ||||||||||||
|
Exercised
|
(600,000 | ) | 1.10 | -- | -- | |||||||||||
|
Expired
|
(110,000 | ) | 6.50 | -- | -- | |||||||||||
|
Outstanding
at September 30, 2008
|
3,960,000 | 4.39 |
4.60
years
|
-- | ||||||||||||
|
Exercisable
at September 30, 2008
|
3,503,333 | 4.40 |
3.88
years
|
-- | ||||||||||||
Page
15
GeoGlobal
Resources Inc.
(a
development stage enterprise)
Notes
to the Consolidated Financial Statements
(Unaudited)
September
30, 2008
8. Stock
Options (continued)
During
the nine months ended September 30, 2008 and 2007, cash received on exercise of
stock options was $662,000 and $320,675 respectively.
During
the period ended September 30, 2008, the options as set out below were granted
for services provided to the Company:
|
Fair
Value
|
||||||||||||||||||||||||||||||
|
Option
|
at
Original
|
Granted
|
Expired
(x)
|
Balance
|
||||||||||||||||||||||||||
|
Grant
|
exercise
|
Grant
|
Expiry
|
Vesting
|
Balance
|
during
|
Exercised
(e)
|
Balance
|
Exercisable
|
|||||||||||||||||||||
|
date
|
price
|
Date
|
date
|
date
|
Dec
31/07
|
the
period
|
during
the period
|
Sept
30/08
|
Sept
30/08
|
|||||||||||||||||||||
|
mm/dd/yy
|
$ | $ |
mm/dd/yy
|
mm/dd/yy
|
# | # | # | # | # | |||||||||||||||||||||
|
01/18/05
|
1.10 | 0.62 |
08/31/08
|
Vested
|
600,000 | -- |
(e)
600,000
|
-- | -- | |||||||||||||||||||||
|
06/14/05
|
3.49 | 1.55 |
06/14/15
|
Vested
|
150,000 | -- | -- | 150,000 | 150,000 | |||||||||||||||||||||
|
08/24/05
|
6.50 | 2.38 |
08/24/08
|
Vested
|
110,000 | -- |
(x)
110,000
|
-- | -- | |||||||||||||||||||||
|
10/03/05
|
6.81 | 3.07 |
10/03/15
|
Vested
|
16,666 | -- | -- | 16,666 | 16,666 | |||||||||||||||||||||
|
10/03/05
|
6.81 | 3.83 |
10/03/15
|
Vested
|
16,667 | -- | -- | 16,667 | 16,667 | |||||||||||||||||||||
|
10/03/05
|
6.81 | 4.38 |
10/03/15
|
10/03/08
|
16,667 | -- | -- | 16,667 | -- | |||||||||||||||||||||
|
06/14/06
|
5.09 | 2.06 |
06/14/16
|
Vested
|
200,000 | -- | -- | 200,000 | 200,000 | |||||||||||||||||||||
|
07/25/06
|
3.95 | 1.14 |
12/31/09
|
Vested
|
100,000 | -- | -- | 100,000 | 100,000 | |||||||||||||||||||||
|
07/25/06
|
3.95 | 1.39 |
12/31/09
|
Vested
|
660,000 | -- | -- | 660,000 | 660,000 | |||||||||||||||||||||
|
07/25/06
|
3.95 | 1.60 |
12/31/09
|
Vested
|
50,000 | -- | -- | 50,000 | 50,000 | |||||||||||||||||||||
|
07/25/06
|
3.95 | 1.78 |
12/31/09
|
Vested
|
145,000 | -- | -- | 145,000 | 145,000 | |||||||||||||||||||||
|
07/25/06
|
3.95 | 2.01 |
12/31/09
|
07/25/09
|
70,000 | -- | -- | 70,000 | -- | |||||||||||||||||||||
|
07/25/06
|
3.95 | 1.14 |
07/25/16
|
Vested
|
500,000 | -- | -- | 500,000 | 500,000 | |||||||||||||||||||||
|
07/25/06
|
3.95 | 1.14 |
07/25/16
|
Vested
|
500,000 | -- | -- | 500,000 | 500,000 | |||||||||||||||||||||
|
11/24/06
|
7.52 | 2.47 |
11/24/09
|
Vested
|
10,000 | -- | -- | 10,000 | 10,000 | |||||||||||||||||||||
|
11/24/06
|
7.52 | 2.92 |
11/24/09
|
Vested
|
10,000 | -- | -- | 10,000 | 10,000 | |||||||||||||||||||||
|
11/24/06
|
7.52 | 3.70 |
11/24/09
|
12/31/08
|
10,000 | -- | -- | 10,000 | -- | |||||||||||||||||||||
|
05/16/07
|
5.09 | 1.51 |
05/16/10
|
Vested
|
10,000 | -- | -- | 10,000 | 10,000 | |||||||||||||||||||||
|
05/16/07
|
5.09 | 2.09 |
05/16/10
|
12/31/08
|
10,000 | -- | -- | 10,000 | -- | |||||||||||||||||||||
|
05/16/07
|
5.09 | 2.09 |
05/16/10
|
05/31/09
|
10,000 | -- | -- | 10,000 | -- | |||||||||||||||||||||
|
06/20/07
|
5.06 | 2.08 |
06/20/17
|
Vested
|
200,000 | -- | -- | 200,000 | 200,000 | |||||||||||||||||||||
|
07/03/07
|
5.03 | 1.70 |
12/31/10
|
Vested
|
35,000 | -- | -- | 35,000 | 35,000 | |||||||||||||||||||||
|
07/03/07
|
5.03 | 1.70 |
12/31/10
|
Vested
|
10,000 | -- | -- | 10,000 | 10,000 | |||||||||||||||||||||
|
07/03/07
|
5.03 | 1.70 |
12/31/10
|
Vested
|
42,500 | -- | -- | 42,500 | 42,500 | |||||||||||||||||||||
|
07/03/07
|
5.03 | 1.70 |
12/31/10
|
Vested
|
847,500 | -- | -- | 847,500 | 847,500 | |||||||||||||||||||||
|
07/03/07
|
5.03 | 1.98 |
12/31/10
|
12/31/08
|
20,000 | -- | -- | 20,000 | -- | |||||||||||||||||||||
|
07/03/07
|
5.03 | 2.25 |
12/31/10
|
07/03/09
|
120,000 | -- | -- | 120,000 | -- | |||||||||||||||||||||
|
07/29/08
|
3.48 | 3.08 |
07/29/18
|
07/29/09
|
-- | 200,000 | -- | 200,000 | -- | |||||||||||||||||||||
| 4,470,000 | 200,000 | 710,000 | 3,960,000 | 3,503,333 | ||||||||||||||||||||||||||
9. Related
Party Transactions
Related
party transactions are measured at the exchange amount which is the amount of
consideration established and agreed by the related parties.
a) Roy
Group (Mauritius) Inc. (RGM)
RGM is
related to the Company by common management and is controlled by an officer and
director of the Company who is also a principal shareholder of the
Company. On March 27, 2003, the Company entered into a Participating
Interest Agreement (PIA) with the related party.
Page
16
GeoGlobal
Resources Inc.
(a
development stage enterprise)
Notes
to the Consolidated Financial Statements
(Unaudited)
September
30, 2008
9. Related
Party Transactions (continued)
b) Roy
Group (Barbados) Inc. (Roy Group)
Roy Group
is related to the Company by common management and is controlled by an officer
and director of the Company who is also a principal shareholder of the
Company. On August 29, 2003, the Company entered into a Technical
Services Agreement (TSA) with Roy Group to provide services to the Company as
assigned by the Company and to bring new oil and gas opportunities to the
Company. The term of the agreement, as amended, extends through
December 31, 2008 and continues for successive periods of one year
thereafter. Roy Group receives consideration of $350,000 per
year, as outlined and recorded below:
|
Three
months
ended
Sept
30, 2008
|
Three
months ended
Sept
30, 2007
|
Nine
months
ended
Sept
30, 2008
|
Nine
months ended
Sept
30, 2007
|
Period
from
Inception,
Aug
21, 2002 to
Sept
30, 2008
|
||||||||||||||||
|
Consolidated
Statements of Operations
|
||||||||||||||||||||
|
Consulting
fees
|
43,750 | 17,500 | 131,250 | 52,500 | 399,917 | |||||||||||||||
|
Consolidated
Balance Sheets
|
||||||||||||||||||||
|
Oil
and gas interests
|
43,750 | 70,000 | 131,250 | 210,000 | 1,205,916 | |||||||||||||||
| 87,500 | 87,500 | 262,500 | 262,500 | 1,605,833 | ||||||||||||||||
The
Company recognized compensation cost for stock-based compensation arrangements
with the principal of Roy Group as outlined and recorded below:
|
Consolidated
Statement of Operations
|
||||||||||||||||||||
|
General
and administrative
|
-- | 4,754 | -- | 33,279 | 114,100 | |||||||||||||||
|
Consolidated
Balance Sheets
|
||||||||||||||||||||
|
Oil
& gas interests
|
-- | 19,017 | -- | 133,117 | 456,400 | |||||||||||||||
| -- | 23,771 | -- | 166,396 | 570,500 | ||||||||||||||||
At
September 30, 2008 the Company owed Roy Group (Barbados) Inc. $37,974 (December
31, 2007 - $33,192) for services provided and expenses incurred on behalf of the
Company and pursuant to the TSA. These amounts bear no interest and
have no set terms of repayment.
c) D.I.
Investments Ltd. (DI)
DI is
related to the Company by common management and is controlled by an officer and
director of the Company. DI charged consulting fees for management,
financial and accounting services rendered, as outlined and recorded
below:
|
Three
months
ended
Sept
30, 2008
|
Three
months
ended
Sept
30, 2007
|
Nine
months
ended
Sept
30, 2008
|
Nine
months
ended
Sept
30, 2007
|
Period
from
Inception,
Aug
21, 2002 to
Sept
30, 2008
|
||||||||||||||||
|
Consolidated
Statements of Operations
|
||||||||||||||||||||
|
Consulting
fees
|
53,188 | 46,250 | 159,563 | 138,750 | 861,279 | |||||||||||||||
The
Company recognized compensation cost for stock-based compensation arrangements
with the principal of the related party as outlined and recorded
below:
|
Consolidated
Statement of Operations
|
||||||||||||||||||||
|
General
and administrative
|
-- | 23,771 | -- | 166,396 | 570,500 | |||||||||||||||
At
September 30, 2008, the Company was owed $42,066 (December 31, 2007 – payable of
$26,007) as a result of services provided and expenses incurred on behalf of
DI. These amounts bear no interest and have no set terms of
repayment.
Page
17
GeoGlobal
Resources Inc.
(a
development stage enterprise)
Notes
to the Consolidated Financial Statements
(Unaudited)
September
30, 2008
9. Related
Party Transactions (continued)
d) Amicus
Services Inc. (Amicus)
Amicus is
related to the Company by virtue of being controlled by the brother of an
officer and director of the Company. Amicus charged consulting fees
for IT and computer related services rendered, as outlined below:
|
Three
months
ended
Sept
30, 2008
|
Three
months
ended
Sept
30, 2007
|
Nine
months
ended
Sept
30, 2008
|
Nine
months
ended
Sept
30, 2007
|
Period
from
Inception,
Aug
21, 2002 to
Sept
30, 2008
|
||||||||||||||||
|
Consolidated
Statements of Operations
|
||||||||||||||||||||
|
Consulting
fees
|
25,217 | 13,045 | 67,534 | 39,334 | 263,241 | |||||||||||||||
The
Company recognized compensation cost for stock-based compensation arrangements
with the principal of the related party as outlined and recorded
below:
|
Consolidated
Statement of Operations
|
||||||||||||||||||||
|
Consulting
fees
|
(2,830 | ) | (85,193 | ) | (35,168 | ) | (155,597 | ) | 581,037 | |||||||||||
At
September 30, 2008, the Company owed Amicus $12,729 (December 31, 2007 – $6,953)
as a result of services provided and expenses incurred on behalf of the
Company. These amounts bear no interest and have no set terms of
repayment.
10. Net
loss per share amounts
The
following table presents the reconciliation between basic and diluted income per
share:
|
Three
months
ended
Sept
30, 2008
|
Three
months
ended
Sept
30, 2007
|
Nine
months
ended
Sept
30, 2008
|
Nine
months
ended
Sept
30, 2007
|
|||||||||||||
|
Restated
note
8c
|
Restated
note
8c
|
|||||||||||||||